When oil prices collapsed after the Saudis opened the spigots and dropped the “oil bomb” on the world (and they still have bombs to drop if need be) ACC (and others) warned that this could be very damaging to the American economy. Though the lower gas prices were welcome, the engine of the post Crash “recovery” in the USA was the fracking revolution which spread down the Rocky mountains and into parts of the Midwest. Now an economic slowdown is spreading the same way.
The Saudis landed the first blow (some believe in protest of our dealings with Iran) and then reality said hello in China which amounted to another shot to the jaw for oil and gas in the USA. And it’s now not just fossil fuels. Pretty much every raw material is affected by the China slowdown. Now many are wondering where this commodity malaise is headed.
(From The New York Times)
“Everybody is scared to death, and we’re anticipating the worst,” said Mike McCabe, 53, a second-generation steelworker who has spent nearly two decades working in the furnace where molten iron and scrap metal are transformed into steel. “They pay us to make pipe. That’s what we do. But the rumor is that the order book is terrible.”
The fall in prices for a variety of products, including crude oil, iron ore and agricultural crops like corn and soybeans is reminiscent of the collapse of the technology boom in 2000 or the bursting of the housing bubble nearly a decade ago. And behind the pain and anxiety are headwinds blowing from China and other emerging markets, where growth is slowing and demand for the raw materials that drive the global economy has dried up.